Automation Technologies 5/2014

news and markets

news and markets UNTAPPED POTENTIAL IN INDO-GERMAN RELATIONS Commentaries about international collaboration, particularly when they come from economic development companies like hannoverimpuls, aim at success stories. So, let us indeed start with one, but to cut to the chase: Economic ties between the Western world and countries like India fall far short of fulfilling their potential. This is a tragedy! Firstly, the success story. Next year’s “Hannover Messe” will take place with India as a partner country. More than 250,000 visitors are expected to attend to promote their businesses. India, with a population of “We do not understand each other well enough” 1.2 billion, is expected to surpass China as the most populous country in the world but it also has the third highest GDP (PPP), succeeding only China and the United States. So, not only are we delighted to welcome the business-world to Hanover again. We will have a very strong and promising partner at our side! Nevertheless, there’s a flip side of the coin. Why are economic ties between India and Germany still so backward? Normally, such a market would be a prime interest for European companies. Why is this not the case? – because we do not understand each other well enough. While Germany is focusing more and more on Industrie 4.0 or Big Data, Indian market is different. Why do Indian people need cars? – as a means of transportation. Western sales arguments focus on Bluetooth connections or safety systems. Why do many Indians need a phone? – to communicate via voice calling. Other features may be alright, but become excessive when they only add vulnerability to the core product. While we, in the Western industrialised world, value technical fripperies in a wide variety of products, demand in developing countries continues to rise for products that fulfil basic needs. This philosophy, is condensed to “frugal engineering”. Many in Germany know Dacia Logan – a car, simple, efficient, cheap. It is produced without any robots or other bells and whistles. And, the model is steadily pushing into the global car market. It has been a rude awakening for carmakers like VW, Toyota, Suzuki, Chrysler. High-end carmakers developed countless high-end solutions and are now fearing a low-cost car? Why is a car, intended for nothing more than transporting people such a success? Because it’s using its familiarity with the target countries. Dacia has simply tailored its product to meet demand. Meeting the demand – why is it so difficult to follow such a simple rule? Because frugal engineering is a “moving target”. The urge to sell the same product worldwide is overwhelming. It’s easy: no additional AUTOMATION TECHNOLOGIES 5/2014

news and markets worser, complexity is a reason for failure. We are familiar with reports about unsatisfied customers in China publicly destroying Western cars. This is precisely the reason why companies have to involve local partners. Frugal products cannot be produced and sold without help. A joint approach is the only way to approach such markets. Be aware: Consumers are likely to be as loyal to their products as they were in Germany after World War II. Someone who bought a Mercedes in the 1950’s was likely to remain loyal to his very first car maker. And this has meant success for Daimler. This trend will repeat in India. If Western firms want to be successful, they “Complexity is a reason for failure” Peter Eisenschmidt, hannoverimpuls GmbH workflows, a simple case of extending sales models. In addition, simplifying complex products can be a considerable challenge when all parts are already engineered to fit perfectly together. You cannot produce a simpler version of the Daimler E-Class. In countries like India or China, demand for luxury products is high and growing. However, many people in these places do not need and cannot fully exploit the functions on such complex products. Even should pay close attention to mentality and market conditions. If you are not first in you’ll certainly never make it. Sharing insights is precisely what “hannoverimpuls” and the State of Lower Saxony are doing at the “German-Indian Business Center” (GIBC). In this context, the hannoverimpuls company connects German businesses with Indian partners. First and foremost, it’s about understanding. The challenges related to cultural differences must not be underestimated. Hanover is one of the few locations in Germany with deep and long-lasting experience in Indo- German business relations. The GIBC has existed for eight years. One-sided thinking will not facilitate mutual learning. On the contrary, German business actors must understand: over-performance at a technical level is not needed. Moreover, the reliability of Indian partners is crucial for their German counterparts. This, and much more, is what we can gain from one another. www.hannoverimpuls.de/en AUTOMATION TECHNOLOGIES 5/2014